Trading places

Getting components delivered, and shipping out your finished product, can be fraught with difficulty. Brian Davis finds out how communication through new technology has turned up a number of solutions to this age-old problem.

Getting components delivered, and shipping out your finished product, can be fraught with difficulty. Brian Davis finds out how communication through new technology has turned up a number of solutions to this age-old problem

The introduction of new e-logistics packages and services is transforming traditional approaches to managing transport and tracking shipments. Many companies are contracting out these functions to third party logistics operators and service providers, while others are optimising their logistics, from component supply to final delivery, in-house. At the same time, new internet-based logistics marketplaces and portals are promising to cut the cost of freight transport.

Companies want to optimise their transport needs for goods which may need to be carried across many different countries and by different modes of transport in the journey from supplier to customer. They want to be able to track goods in transit in real time, with automatic alerts to tell them when problems could affect delivery dates.

One company which decided to contract out its logistics needs is Ford. In July, it struck a 10-year deal with US software house Vastera to manage all its global trade operations, worth $24bn annually, including the purchase of parts from international suppliers via the internet.

Vastera offers software for import/export documentation such as its TradeSphere and TradeVantage packages for operations outsourcing. It operates an e-trade portal called TradePrism.com, which allows Ford to communicate with its carriers, custom brokers and freight forwarders.

For companies keeping their logistics in-house, new software from companies such as Global Logistics Technologies (G-Log), Manugistics and i2, can optimise transport planning with ‘intelligent’ systems based on the experiences of transport managers.E-logistics promises significant efficiency improvements in transport operations, says Colin Reardon, vice-president of European operations at G-Log. ‘But e-logistics software is very specialised and its complexity is staggering,’ he says.

The software needs to be able to optimise the time and cost of transporting components on journeys comprising several stages on different modes of transport. It must take routing decisions and continually update them to take account of any problems arising and alert the user when shipments are delayed.

G-Log claims its Global Command and Control Centre (GC3) software is one of the most advanced packages of this type.

At the same time, e-logistic portals will allow transport managers to invite bids for transport contracts from a wider pool of potential suppliers, with the aim of reducing costs or improving delivery times. G-Log is involved in the development of industry- specific logistics portals, such as ShipChem.com, which is being created in partnership with Eastman Chemicals to provide logistics services to the chemicals and plastics industries. Similar logistics portals are under discussion for business-to-business markets in the food industry and pharmaceutical markets.

In Europe, the Global Freight Exchange, i2’s FreightMatrix and Descartes’ e-transport.com are offering e-marketplaces. Reardon says: ‘The e-transport portals will give customers the opportunity to go onto spot markets to gain access to more competitive transport suppliers.’ He estimates potential savings of up to 10%.

At the same time carriers will be able to sell their spare capacity — it is estimated that trucks run full only 20% of the time.

Software supplier Manugistics is seeing increasing demand for packages such as its NetWork Transport package for trading networks and e-marketplaces. It is providing systems for industrial e-marketplaces including CommerxPlasticsNet, CommerxMetals.com — the eConnections business-to-business hub for the electronics industry — and FreightWise, an electronic marketplace for transport services and information.

Getting it all together

Graham Newland, vice-president of strategic development at Manugistics, says the group has seen significant e-logistics development over the past two years. ‘There has been an evolution of trading exchanges and trading networks across different organisations, or in private networks where a company is in contact with key suppliers,’ he says. ‘The challenge is to bring groups of companies together who sell or supply each other and require e-procurement and auctions for capacity and transport. ‘Companies require more choice at lower cost,’ he adds. ‘Transport and logistics planners are seeking door-to-door transport using different modes and different operators at least cost.’

Newland adds that e-logistics is being adopted fastest by consumer product manufacturers and the high-tech sector. In other sectors growth is slow. He anticipates it will be 12–18 months before there is widespread adoption of e-logistics software. ‘Often this means creating new organisations specifically for each client. Companies are not just seeking to use exchanges to give more choice and lower cost, but they also want improved service, and help in running the supply chain better.’

The chain of command

An innovative venture was launched in September to address this problem by transforming entire supply chains. Called SCIO (Supply Chain Intelligence Optimised), it is an alliance between logistics expert TDG and consultant Cap Gemini Ernst & Young. Martin Whale, sales director of SCIO, says: ‘The new business will offer to manage the complete supply chain, from supplier to end-user, for manufacturers and retailers across a wide range of industries.’

SCIO will first gain an understanding of the client’s supply chain needs, identifying areas of waste and poor service, and create an action plan. It will then manage the implementation of this plan, using its software to maximise efficiency in the redesigned supply chain.SCIO is currently in talks with companies in the chemical and retail industries. Cap Gemini has previously carried out supply chain transformation projects for SmithKline Beecham, Volkswagen, Audi and Rolls-Royce, and is currently developing a new transport portal. Joaon Mendes is director of European pre-sales logistics at i2, a partner in the Worldwide Retail Exchange and in MetalSite — which aims to provide collaborative planning operations and greater efficiencies to the $900bn global metal industry supply chain. He admits that there is still a long way to go before many companies realise the potential benefits of logistics software.

‘It’s still early days for most companies to take e-logistics software on board,’ he says. ‘High- tech companies and fast moving consumer goods companies are leading the way. They are moving at a different pace because they face very complex logistics problems, which requires specialist software.’

By contrast, other industry sectors are slow to change. ‘It’s more a question of management approach,’ says Newland, ‘as the solutions are now available.’

Who’s who in e-logistics

Who to approach if you want to…

Contract out the whole operationVastera — www.vastera.com

Improve your supply chain

Suppliers of software to drive e-logistics and trading exchanges, for supply chain management, and for optimising transport planning